How to Take Advantage of First-Time Buyer Incentives

11.16.23 | Buying

Breaking the cycle of renting and buying a home for the first time is an incredible accomplishment. In addition to promising a whole heap of lifestyle advantages, homeownership is an important step in building a solid financial foundation for the future. 

That said, given Toronto’s reputation for high-priced real estate, there are a lot of younger people who worry that breaking into the housing market will be an uphill battle. In reality, today’s buying conditions aren’t as tough as many would-be buyers might think. And, for first-time buyers in particular, there are several government incentives that can make the process of purchasing a home in Toronto even easier. 

In this blog, we’ll cover some of the incentives and tax breaks that first-time home buyers in Toronto can use to their advantage. 

Canadian First-Time Home Buyers’ Incentive

The Canadian First-Time Home Buyers’ Incentive is a program offered by the federal government that aims to alleviate some of the upfront costs of buying a home. With this incentive, the government covers a portion of the downpayment cost for first-time buyers. For traditional resale homes, they’ll cover up to 5% of the downpayment cost and for new construction homes, they’ll cover 5 or 10%. 

While this program does give the government a portion of the home’s equity, recent adjustments have eased the total share of appreciation. As of late 2023, homeowners only pay back up to 8% (not compounded) on the amount claimed from the date of advance to the time of repayment. This allows first-time buyers to hold onto more of their investment as the home appreciates in value long term. 

Who Qualifies?

In addition to being a first-time buyer, there are other rules regarding who can take advantage of this program. 

Eligibility varies by city. In Toronto, this benefit is only available to buyers with a qualifying annual income no greater than $150,000. On top of that, a buyer’s insured mortgage and the incentive amount cannot exceed 4.5 times their annual income. 

Searching for more blogs about how home buying can help you build personal and generational wealth? Check out these posts. 

Land Transfer Tax Rebates

In addition to the down payment and deposit, one of the larger transaction costs that come with buying a home in Toronto is the Land Transfer Taxes – which come at both a municipal and provincial level. The total expense of these fees can reach close to $10,000 depending on the property. 

That said, most first-time home buyers in Toronto are eligible for a refund on both municipal and provincial land transfer taxes – saving them a sizable amount of money. However, one important detail to note about these rebates is that they’re only available for purchases where each purchaser has not owned property before. Meaning if a couple purchases a home but one spouse has owned a residential property in the past, they will not be eligible for this rebate. 

First-Time Home Buyers’ Tax Credit

Along with the First-Time Home Buyer’s Incentive, the federal government is offering extra relief for first-time buyers come tax season. The First-Time Home Buyers’ Tax Credit offers up to $1,500 in credit to eligible home buyers. While this amount is comparatively modest to some of the other incentives on this list, it’s a small perk that can go a long way. 

Buying a home in Toronto for the first time? Check out these other posts from our blog for helpful tips. 

A New Perspective on Buying

Along with these helpful government incentives and programs, first-time buyers in Toronto can also benefit from a new perspective on buying in today’s market. While purchasing a home is no small cost, the idea that property ownership is less fiscally feasible for younger buyers isn’t true.

Unfortunately, many would-be buyers are hesitant to begin their home search because of what they’ve heard about contemporary interest rates. However, today’s lending costs aren’t as unprecedented as many assume. In fact, compared to the past four decades or so, today’s mortgage rates are more or less average.

With that in mind, prospective first-time buyers should reframe their perspective on mortgage costs as they look towards their home ownership goals. The sooner buyers get into the market, the sooner they can reap the benefits of buying. 

Want to find the perfect Toronto home for your needs and lifestyle? Silver Burtnick & Associates can help. Call 416-587-3300 or click here to send us an email

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